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"Azuray Technologies enters a growth phase"

The 30-person company, based in Durham near the Bridgeport Village shopping center, is working to commercialize a technology first developed at Oregon State University.

"Azuray Technologies enters a growth phase"

CEO of Azuray Technologies, Les Crudele. Photo courtesy of Sustainable Business Oregon

By Erik Siemers
Sustainable Business Oregon

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Already backed by $13 million in venture capital, solar energy electronics startup Azuray Technologies Inc. is hoping to raise another $12 million to $15 million in the next six months to finance its next growth phase.

The effort comes just as the market for its technology — which uses electronics to optimize the energy output of solar panels — is poised to reach somewhere between $500 million and $1 billion in the next five years, depending on the estimate.

“We’re hoping to have more than our share of that business,” said Azuray CEO Les Crudele.

The 30-person company, based in Durham near the Bridgeport Village shopping center, is working to commercialize a technology first developed at Oregon State University.

A typical solar array includes a series of panels strung together. If one of those panels is in the shade and underperforms, it will affect the output of the rest of the panels.

“By adding electronics to the back,” Crudele said, “you make sure every panel generates its maximum output.”

Azuray, which is pre-revenue, has worked with Chinese junction box manufacturer Renhe Photovoltaic Technologies — a company Crudele said serves about 25 percent of the global solar market — to design junction boxes to house the company’s technology on the back of a solar panel. Azuray opened an office in China earlier this year.

Its goal, which it hopes to achieve some time this year, is to strike deals with major manufacturers to integrate Azuray’s electronics directly onto the panels.

To date, the company has been backed by venture capital firm New Enterprise Associates Inc., which invested an initial $8 million Series A round, which was extended by $5 million in May 2010.

Now, Crudele is hoping to land up to $15 million more in a Series B round, funding operations through 2012 when he expects to seek yet another round as he predicts production volume to pick-up.

And if the market evolves as forecasted, the demand should be there.

M.J. Shiao, an analyst with Boston-based clean technology research firm GTM Research, said the global market for solar optimization products was just around $150 million last year. That figure is expected to double this year, growing to $1.2 billion by 2015.

“It’s probably one of the quickest growing areas of solar electronics,” Shiao said.

Adoption of the technology has come largely in the U.S. thus far, with stand-alone products that are added to panels on-site rather than by the manufacturer.

Though the numbers may seem promising, Shiao said there remain major hurdles to market acceptance.

For one, most of the players — Azuray included — are unproven. And though the venture capital investments have been significant, it may not be enough to generate trust.

“Because the space is so filled with venture-backed startups, none of these companies have balance sheets, profits or capital backing them up,” Shiao said. “They can claim they have a 20 to 25 year warranty, but how can you trust that if they don’t have a strong balance sheet?”

One of Azuray’s contemporaries could be a key to building confidence in the space.

Petaluma, Calif.-based Enphase Energy, a developer of a different but related product called a microinverter, last week filed paperwork for an initial public offering it hopes will raise $100 million in capital.

“If it is a successful IPO,” Shiao said, “it will be a major boost to this part of the market.”

Meanwhile, the venture capital market remains strong for solar energy technology.

In the first quarter of 2011, the latest data available, venture capital invested in clean technology companies grew 37 percent to $2.65 billion. Leading the investments were solar-related companies, which accounted for 24 percent of all global clean tech venture investment, said Sheeraz Haji, CEO of San Francisco-based research firm Cleantech Capital.

“I think it’s still a strong area, for sure,” Haji said. “You certainly have big dollars going into solar.”

Though Azuray is still working to commercialize its technology, Crudele hopes by the fourth quarter of this year to announce new partnerships with major panel-makers, allowing Azuray to generate revenue.

 
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